The Blog of International Judicial Assistance | By Ted Folkman of Pierce Bainbridge

Lago Agrio: Letters Blogatory In The Field

Posted on August 1, 2014

I’ve spent the last several days in Ecuador seeing first-hand some of the places I’ve been writing about for the past three years. Before I turn to what I’ve been seeing and doing, a word of explanation is in order.

Full Disclosure

I’ve been in Ecuador at the invitation of the Ecuadoran government, which invited me and several others from various walks of life down to hear and see the Ecuadorans’ perspective on things. The government paid for my travel, room, and board. Now, before anyone gets the idea that this was some sort of luxurious junket, consider the following. I flew coach, through Miami. We were up in the wee hours each day but one, and on the day of my return to Boston I was up at 3 a.m. I had to get every shot known to man. I had to fly on a helicopter. One leg of our travels was on a military twin-prop plane where we had to wear the oxygen masks, and where this wasn’t the result of an emergency, but just how the plane worked. The mud was thigh-deep. In short, this was not luxury travel. I provide some photographic evidence to prove the point:

The smoothest ride ever

It’s true! The plastic bag does not inflate.

That being said, the Ecuadorans I met were warm hosts, and the government did a good job providing the logistics and security that allowed us to get around to some very hard-to-reach places.

There were some conditions that came along with the invitation, and before I accepted, I had a negotiation with representatives of the Ecuadoran embassy to make sure that the trip would be consistent with what I regard as my obligation to you, my readers, to provide unbiased coverage. I made sure that I would have the right to write anything I wanted about what I saw and heard, and the right not to write at all if I wished. There were only two limitations, which I thought were reasonable. First, the roundtable discussions we held in Quito on Tuesday were held under the Chatham House rule, which is to say that nothing said was for attribution. This is a fairly commonly used rule that seemed acceptable. Second, I couldn’t make the fact of the trip public until after it happened. This condition was a little more difficult in my view. I think the government’s motive was reasonable—it wanted to keep the discussions private, and it was concerned about interference by other interested parties. I would have preferred not to have this condition, because without it, I would have been in touch with representatives of Chevron and the Ecuadoran plaintiffs to let them know I would be in Ecuador and to ask whether there was anything they wanted me to see and hear while I was there. However, it seemed to me that the trip gave a rare opportunity actually to see the kind of sites I have been writing about for the past few years. I decided that I would write about the oral presentations I heard in Ecuador right away after the trip, but that I would not write about the sites I saw without sharing the locations with Chevron and the LAPs and giving them the opportunity to weigh in. Therefore, this post will only deal with the Tuesday discussions, not with my visits to the Amazon on Monday and Wednesday. I leave it to you, readers, to decide whether this is a reasonable compromise, but I believe it is.

I also made it a condition of my participation that I wouldn’t take part in any propaganda. Now, to be sure, I understood at the time that the whole event was propaganda of a sort, but I made it clear I did not want to give press interviews, lend my name to any government-sponsored communications, and so forth. In the end, the Ecuadoran press was more present than I had expected, but I think that this sort of creeping media presence comes with the territory when you’re at an event with a major PR component. Again, I was satisfied before the trip and I’m still satisfied that the government hadn’t made me into an unwilling endorser of its decisions.

Last, I gave some thought to why the government decided to invite me, or rather, why the government decided to invite me. Here’s the best I can come up with. I imagine a graph with two axes. One axis measures credibility. The other axis measures favorability towards the Ecuadoran government’s position in various aspects of the Chevron case. There are a lot of highly respected US journalists who probably score high on the credibility axis but who are not very favorable to the government’s position. On the other hand, there are a lot of enthusiasts who favor the Ecuadoran government and the LAPs but who, without doubting their sincerity, lack real credibility. I think that I fall in an underpopulated area on the graph. I believe I am credible enough and favorable enough to the government to make me a useful person to try to influence. And I think that the government knew that unlike many, or maybe all, of the other participants, I write regularly about the case and that they could expect me to write about my experiences in Ecuador.

I think a professional journalist employed by a newspaper probably wouldn’t have accepted the invitation because the trip was paid for by the government. On the other hand, a professional journalist employed by a newsroom has a budget for this sort of thing, and the budget is paid for in part by subscription revenue but also in part by advertising revenue. So I am satisfied that it was appropriate for me to accept the invitation.

Ultimately, it’s up to you, readers, to decide whether you think my coverage of the case is independent and unbiased. I think, and hope, that it is.

The Group

The group invited was primarily though not exclusively American. I was the only lawyer in private practice. The others included lawyers working for environmental NGOs, representatives of several think tanks, academics in the fields of law, biology, environmental science, and oil remediation, and representatives of international finance bodies. We were accompanied for much of the time by representatives of the Ministry of the Environment, the Ecuadoran embassy to the United States, and PetroAmazonas, which with PetroEcuador is part of Ecuador’s state-owned oil enterprise. Because we spent a lot of time together traveling around the country and at the hotel, we had a lot of time for our own discussions. Each of us had particular knowledge and expertise to bring to the table. The technical people in the group were particularly helpful in explaining to us what we were seeing, to point out what made sense and what could be improved, and to make suggestions to the Ecuadorans for improvement that I believe they are taking seriously. I think it is fair to say that I was the member of the group most familiar with the Chevron/Ecuador litigation, and I undertook to provide background and context to what we were hearing from the Ecuadoran government. In part, this was simply by way of attempting to give the group an overview of the litigation in all its complexity. In part, it was by way of outlining the other side of the case. So, for example, when the Ministry of the Environment would emphasize Chevron’s failure to remediate polluted sites, I would explain to the group the remediation plan, and the Act by which the former government of Ecuador acknowledged that Texaco had completed the remediation and released it from liability. I would then try to explain a little about the controversy about the applicability of the release to the claims of the private plaintiffs. Or when we heard about the bias of Judge Kaplan, I would try to explain the outcome of the various attempts to recuse him. I could give several other examples. But in short, I tried to give the group what I hope was a fuller picture of what was at issue in the case. And, of course, on questions where I believe the Ecuadoran government is correct, I subjected the group togave the group the benefit of my views there, too.

The Political Speeches

Now on to the conference. The event was held, to my surprise, at an Opus Dei house in Quito.

Saint Josemaría Escrivá

Given Opus Dei’s reputation as a right-wing Catholic organization and the left-leaning tendencies of the Correa government, I wouldn’t have imagined the event would be welcome there, but it seems that the indefatigable Gustavo Domínguez, one of the organizers, has friends everywhere. As we waited to begin, the music from the “All You Need Is Ecuador” campaign, which I’ve written about before, played over the speakers. The first part of the event, which was open to the press but at which no questions were taken, featured speeches by Letters Blogatory contributor Nathalie Cely, Ecuador’s ambassador to the United States, Lorena Tapia, the Minister for the Environment, and the Secretary General for Public Administration, Vinicio Alvarado. The speeches were preceded by the singing of the Ecuadoran anthem, Salve, Oh Patria, a jaunty march in A-B-A form with an instrumental introduction. They say that in the Battle of the Bulge, when German spies had infiltrated the American ranks, the GIs would shoot as a spy anyone dressed in an American uniform who knew more than the first verse of the Star Spangled Banner. That method of detecting spies would not work for Ecuadorans, who sang all three stanzas with gusto.

Ambassador Cely set the stage for the entire day by outlining the themes of the conference: the challenge of rebalancing the goals of development, environmental protection, and human rights; Ecuador’s new development plan aimed at developing a knowledge-based economy; and Ecuador’s goal of “updating” bilateral investment treaties to include protections for human rights and the rights of nature as well as the right to a return on investment. She expressed particular concern about the power of arbitrators to reinterpret treaties in a way the states that made the treaties don’t approve and of the pro-investor bias of some arbitrators.

She spoke of her visit to the Amazon region with President Correa in 2007. The Amazon is the poorest region of the country, even though it is the richest in resources. “The pollution is there,” she said. “It’s undeniable. We’re just asking for justice for our communities.”

Minister Tapia spoke in broad terms about Ecuador’s approach to the rights of nature, and she then focused on particular initiatives. First, she mentionedPañacocha, Petroamazonas’s model oil extraction site and one of the places we visited later in the trip. Pañacocha is “a model in Latin America of the balance between exploitation and the rights of nature and the indigenous communities.” She also mentioned the national park system, which protects 19% of Ecuador’s territory. She noted that Yasuni National Park is the “flagship,” the “best monitored area in the country,” but she did not rehash the reasons for Ecuador’s decision to open a portion of the park to oil industry activity. She noted that the country had restored more than 100,000 hectares of forest in the past year. Minister Tapia concluded by contrasting the Correa administration with past administrations. Here, she was a little polemical, asserting that “under old policies, the law favored corporations that don’t care about the environment, like Chevron,” and she asserted that the oil pollution for which the LAPs are seeking to hold Chevron accountable had a greater environmental impact than either the Exxon Valdez spill or the Gulf oil spill. The government has started programs for remediation of damage caused by Chevron and has been remediating since 2005. I discuss the remediation efforts a little bit more below.

Finally, Secretary General Alvarado emphasized the recent political changes in Ecuador. He noted that Ecuador had previously had seven presidents in ten years, and that the Correa administration’s stability was evidence of social stability. “We are no longer embarrassed by our democracy,” he said. “We want to move from simulated liberty for a few to real liberty of expression for all.” I think this was a veiled comment on the criticisms of the Correa administration’s position regarding the Ecuadoran press, and in particular cases such as the El Universo case and the new Communications Law. This is one area in which President Correa is unlikely to find a sympathetic American audience. Even if the press is controlled by the political enemies who want to undermine his policies, restrictive press laws and defamation lawsuits against journalists surely are not the answer. On the other hand, my discussions with many Ecuadorans make it clear that at least some in the country understand these issues differently, and we can at least take the time to try to understand the stated rationale for the Correa government’s policy on the press even if at the end of the day we call it wrongheaded.

Alvarado ran through some facts and figures. One struck me as particularly interesting: Ecuador intends to generate more than 90% of its electricity hydroelectrically within the next few years. That’s an impressive achievement.

“Welcome to a proud country that has the opportunity to build its own capacities,” he concluded. “We’re here, we’re small, but we’re capable.” That probably was catchier in Spanish, but I think it fairly reflects the Ecuadorans’ pride in what they are accomplishing—a theme that we heard and saw several times throughout the week.

The Roundtable Discussions

After the political speeches, the press left and we got down to the business of the conference, three round-table discussions. I’m not going to give a blow-by-blow of the discussions, but rather, I’ll just identify a few themes that I thought were particularly important to the discussion.

We heard about PetroAmazonas’s stated commitment to sustainable and green development and heard about its model project at Pañacocha. There’s a lot to be said for the Pañacocha project. The main features, as far as I understand it, seem to be the intentional lack of roads connecting the site to the outside world, the use of horizontal drilling techniques to minimize the number of wells that need to be dug from the surface, and the use of advanced techniques to separate the raw material that comes out of the well into its components in a way that does not require the use of the kind of open pits we’re familiar with from the Chevron case.

Here is my very oversimplified and nontechnical understanding of what we learned (both in the discussion and on our visit to Pañacocha): when oil comes out of the ground, it is not just crude oil ready to be refined; it comes along with water and with natural gas. The water and gas need to be removed from the oil to make the oil usable. You can burn off the gas and put the separated water, called “production water,” into pits, but neither of those methods is particularly environmentally friendly. Burning the gas emits pollutants and greenhouse gases into the atmosphere. Using pits of production water can cause contamination of local vegetation and drinking water sources. PetroAmazonas pumps the oil from the all the wells at Panãcocha to a central location, where a multi-phase pump system pumps all three components of the oil to a distant station where the water is separated and then re-injected very deep underground. The gas is burned off, but because it is burned at a large distance from the well sites, it does not adversely affect them, and as a bonus, PetroAmazonas uses the gas to generate the electricity that powers the system.

Perhaps the strongest criticism of the project, and the strongest suggestion for improvement, relates to the use of roads. Apparently the greatest contributor to deforestation in the Amazon is roadbuilding, because even if the authorities do not intend for settlements to grow around the road, they tend to grow spontaneously, with or without permission, and the “colonists,” as the Ecuadorans call them, cut down swathes of the forest for farming and other uses. Roads also can block animals from moving freely through the forest. PetroAmazonas is using so-called “ecological paths” to allow many land and aquatic animals to cross, but we heard from a technically knowledgeable participant that birds living below the canopy will not cross such roads, and that it’s possible to build a substantial facility using only helicopters and river transportation, with no roads at all.

We also heard about Ecuador’s remediation efforts concerning sites left by prior operators (read: Texaco). The government is in the process of surveying the sites and making remediation plans, and it has already remediated some percentage of the sites. One of the comments that the government heard from me as well as from others was that given what Ecuador says is the harm to its citizens caused by the still-extant pollution, it should consider simply cleaning up the mess in a purely forward-looking way, and keeping that clean-up separate from the issues of fault. I happen to think this would be a very smart move, because from a public relations perspective, it would be a way of saying, in effect: “We’re trying to protect the health and environment of our citizens because it’s the right thing to do. Chevron, what are you doing?” We heard hints from some participants that there could be legal difficulties with this strategy. Those of us not privy to the government’s legal advice (including me) can’t really know how sound those legal objections are, but on the face of it, I don’t see strong reasons not simply to go ahead and fix the problem, and indeed, fixing the problem could help solve one of the real difficulties in the case from the plaintiffs’ perspective, namely, the difficulty of quantifying the cost of remediation. If the concern is that cleaning up the mess will be seen as some sort of admission of liability, well, I’m not sure that would happen. And anyway, as we learned, Ecuador’s 2008 constitution imposes a subsidiary obligation on the state to remediate environmental damage and then to look to the responsible party for indemnification.

On the technical side, we also heard about the possible use of microbial techniques to remediate oil in difficult-to-reach locations. I think this suggestion was of interest to the Ecuadorans, and perhaps we will see the technique adopted, though of course whether it’s suitable is a technical question well beyond my understanding.

The last theme that was of particular interest to me was Ecuador’s critique of the investment treaty system. In essence, Ecuador believes that in cases such as the Chevron case, arbitrators, who may have a corporate bias, have improperly held that the state’s exercise of its ordinary regulatory powers to protect the health and well-being of its citizens can subject the state to liability to investors. The government considers this an infringement of its sovereignty. We learned about some of the scholarly critiques of the typical investment treaty that echo Ecuador’s concerns. But of course, as we heard from a participant knowledgeable about the investor-state arbitration system, the primary purpose of the regime is to limit the scope of state action and, importantly, to take the power to decide whether a particular regulatory act violates a treaty, out of the state’s hands, or in otherwords, to limit the state’s sovereignty. So the problem is a difficult one. Some suggestions include trying to make more explicit the meaning of open-ended terms in the treaties or to establish an appellate body to give more uniformity to the interpretation of treaties, though of course there’s no guarantee that an appellate body would rule more favorably to states. Another suggestion is to limit the ability of arbitrators to serve also as counsel, so as to avoid so-called issue conflicts of interest. We noted that Ecuador has already denounced many of its bilateral investment treaties, including the treaty with the United States, so perhaps much of this discussion was academic in the short term. However, it seems Ecuador is making an effort to rally other states to its cause.

At the Carondelet Palace for our meeting with the Vice President

Many of these themes were repeated in a private discussion we had with Ecuador’s vice president, Jorge Glas, who took the time to meet with us for nearly an hour and to hear and respond to our thoughts and suggestions on Wednesday afternoon. My impression was of a diligent and well-intentioned politician who was quite knowledgeable about the technical details of Pañacocha and other projects and of the Chevron case. Given that Vice President Glas is, in effect, acting president while President Correa is away on vacation, it seems to me that the time he devoted to our group was an indication of the importance the government placed on our meetings.

Future posts

My plan is to publish a post about the sites we visited: the Agua Rico 4 site and the Yuca 6 site, both of which have obviously befouled open pits, and the Pañacocha project, which Ecuador holds up as a model. The timing is a little up in the air. As I said at the outset, I want to hear if possible from the other parties before writing on this.

May I also take this opportunity to remind you that nominations for the ABA’s list of best legal blogs is now open? I’d appreciate your support: who else is traveling to the corners of the earth on your behalf?

1 Comment

I have removed several comments from a single commenter from this post for an apparent violation of my terms of service. This is not the first time I have done this, though it is the first time in a while, so as a reminder: it’s okay to post using a pseudonym, but whether you post with a pseudonym or with your real name, you do need to provide a real email address. The email address is visible only to me, not to readers. In this case, the commenter provided an email address that looked at first glance as though it might not be real. I wrote to the address to attempt to confirm that the comments came from that address but did not hear back.